Naked Shorting

Originally posted by KazetNagorra
Do you have any evidence that short selling destabilizes the markets?

It depends what you mean by destabilize.
I do know short covering causes wide fluctuations in the markets on it's slide down.

http://www.investopedia.com/terms/s/shortcovering.asp

The fact that it affected the market so much shows that shorting was widespread.

I think that shorting causes markets to fall too fast and that causes investor panic to increase. Panic is never good and I think this is enough to show potential destabilization can result. The SEC seems to agree.